Dallas TX Commercial Real Estate Market Trends Analysis

Industrial real estate means commercial properties that are usually leased by Business to Business (B2B) companies. These tenants may actually make the products, or they could be middlemen that disburse a producer’s products to other companies.

However, currently, there is an expanding group of industrial buildings whose occupants are internet order fulfillment centers that deliver products directly to the customer.

The proprietors of industrial assets are also long-term investor-landlords. These investments benefit from both revenue (lease) and the projected appreciation in the value of the property. Industrial leases can be structured on either gross or net rent provisions.

Annual and 10 Year Population Growth

Industrial real estate investors have a need for reliable population statistics that is specific to their type of property investment. A decreasing population has a more indirect effect on industrial properties due to a declining tax base. If the local municipality cannot collect adequate taxes, it can’t keep up its responsibilities to adequately administer the infrastructure that industrial tenants have to have.

An area that is losing its population will endure weak commercial property value increase as well as residential. A big consideration for industrial tenants is the availability of suitable employees. The desirable industrial renters won’t locate in a market that is losing possible workers.

Property Tax Rates

Real estate tax rates are the identical economic signal for industrial property investors as they are for multifamily investors. Volatile tax rates indicate a place that most likely isn’t good for your investment’s profitability.

PropertyCashin have informative articles on commercial property taxation and commercial property tax reduction methods to help you learn about taxes more deeply.

Accessibility

Businesses that rent industrial properties ship large products or significant numbers of items. Tractor-trailer trucks are routinely used to handle this. Industrial real estate investors search for properties that are near important highways that large tractor-trailer trucks can access without problems.

Many industrial renters have to reach train or airport cargo terminals. Industrial properties that are placed close to an interstate make this easier, which makes the property more valuable.

Utilities

Companies that produce goods themselves require large levels of water and electricity. If a property doesn’t contain suitable levels of these utilities, some companies will search somewhere else.

Businesses that are housed in retail premises sell directly to the population in the region. This includes single-tenant and multi-tenant properties. Retail companies that want to be by themselves include banks, pharmacies, dining establishments, or auto parts centers.

A building that houses a couple or more stores is considered multi-tenant property, as are “neighborhood” centers, “strip” centers, grocery store anchored centers, or malls with large nationally known stores considered “big box” centers. A big shopping center with a collection of uses including office, retail, and residential are designated “lifestyle” centers.

Retail owners utilize “net” leases that require the renters to separately pay for the property’s taxes, property insurance, and upkeep of the common areas such as the parking areas. Tenants are responsible for maintaining the property as well.

Retail renters have particular site requirements that retail investors use when considering demographic data.

Population Growth

The total specific data and percentages for the whole region are just the start for retail property investors. They also look at the community’s submarkets. Clients have to be able to locate and conveniently reach your retail tenants.

A trade area that does not already have enough “rooftops” won’t do for retailers even if it is growing. Retail property investors want to analyze the current population growth, average annual population growth, decade population growth, and daytime population.

Median Income

National brands or “credit tenants” have very particular site requirements that involve wage levels. Costly items necessitate customers with high incomes while lower priced goods need lower wage households.

Median Age

Retail real estate buyers rely on age data that different investors ignore. If a retail asset is located close to the age groups that potential tenants want, it is simpler to recruit tenants.

Property Tax Rates

The prior description of the way property tax rate information is utilized by industrial and apartment complex buyers pertains to retail investors also. Larger taxes add to the amount of additional rent paid by tenants which can hamper leasing attempts, and cause an adverse effect on property market worth also.

Having your real estate incorrectly assessed by the county is an unobvious issue that leads even to higher losses. Protesting property value assessment can be delegated to the best commercial real estate lawyers in Dallas TX.

Office properties lease working locations to companies. Office units can be big enough for one person or tens of workers. Major companies often lease office locations from others instead of using their company’s cash to acquire or develop space.

Office lease agreements are typically gross or “full service” leases. The rent includes the landlord’s projected costs for utilities, real estate taxes, insurance, and maintenance. This agreement may be customized to answer the requirements of the owner and the tenant.

Office property investors keep these properties for a long period which generates returns from both repeating rental income and the appreciating value of the property.

Population

The populace demographic data that office building investors search for needs to demonstrate a sufficient supply of employees for office tenants. This often involves the number of citizens residing there, their education, and median age. Experienced office investors acquire assets in markets where their tenants want to relocate.

Property Tax Rates

Growing cities that possess a desirable pool of potential office workers will have expected, consistent tax rates. A qualified labor pool recruits desirable office renters.

Incomes/Cost of Living

Wage levels show a potential renter if workers in the market are appropriately qualified for their jobs. The data also helps the tenants estimate labor costs.

Education

Office investors realize that the education achievements of the labor pool will be vital to their prospective lessees. A call center may not need college graduates, but a financial services firm might.

Buy, rehab, rent, refinance, and repeat (BRRRR) is a growth method that creates a collection of leased assets. It’s a Buy and Hold investment because the investor keeps the property for a long time. The investor receives lease income during their ownership and a single sum when the asset’s price increases, then they sell it.

The investor acquires a rental, repairs or improves it, and leases it out. As soon as they can, the investor obtains a “cash-out” refinance that allows them to take equity out of the asset in cash. This becomes the cash investment on their subsequent property, and they do it all again.

You won’t be able to get approved for a traditional commercial financing for real estate in need of a considerable rehab. Banks and other conventional lending firms can’t lend on this type of projects avoiding a high risk.

Scan our directory of commercial real estate vendors to find the top commercial rehab lending companies in Dallas Texas and the best Dallas commercial hard money lenders.

Also, don’t forget about the expert knowledge of the best commercial real estate agents in Dallas TX. They can advise you on the important local market dynamics described further.

Median Gross Rents

This information tells investors whether they can hit their primary and future revenue targets. This single factor is significant when the eventual market decision is made.

Property Value Growth

If real estate values are not increasing, a buy and hold investor loses half of their investment strategy.

Population

The key population statistic for buy and hold projects is the growth rate. Weak residential areas that they need to avoid will demonstrate static or shrinking rates.

Income

Housing investors must understand their targeted tenant, including their level of income. An asset that does not provide the needs of the community will show a high unoccupied rate.

Property Tax Rates

Higher taxes will stifle both short and long term returns. Stable tax rates are a sign of a strong, growing economy.

Keep in mind that local tax offices’ estimates of property market price are frequently inaccurate, which makes owners pay unfair tax amounts unknowingly. To execute a tax protest process, reach out to the top commercial property tax protest companies in Dallas TX and best Dallas commercial real estate appraisers.

The real estate industry understanding of development usually means whole residential neighborhoods or commercial projects of virtually any size. A developer finds and purchases usable land and prepares either parcels for sale or buildings that are leased to tenants.

This requires acceptable zoning, land use plans by civil engineers, construction plans for buildings, and the okay from the local authorities. Once all of that is properly done, the developer oversees the construction work and promotion of the end project.

It could take a year or more from the start to completion of a development project. The economic picture or local laws can change in a damaging way before the project is finished. That is why the most financially dangerous method of real estate investment is development.

Risks may force a developer to pause the development for an undefined term. During this delay, the building may be damaged by vandals, weather conditions, or other factors. You will need services from the best commercial landlord insurance companies in Dallas TX.

Lenders expect your project to get covered by a reliable insurance. Ask the best commercial construction lenders in Dallas Texas which local insurance companies they approve of.

Population

Developers utilize population size and growth speed along with economic and education statistics to make certain that they will have enough retail customers and housing buyers in the region.

Income

Retail property developers consider salary levels to locate their project where it can attract the buyers that their intended renters require. Premium retailers look for upper wage regions, whereas lower priced retail stores require middle class customers.

Businesses that rent office and industrial space utilize wage data as a sign of their labor costs in that market. Those developers look at income data as one sign of a location’s potential for profitability.

Education

Industrial and office space tenants look for different levels of education in the local population. White collar employers want to find a majority of college graduates. Industrial employees don’t need any more than a high school degree.

Age

A lot of developers want to find a young to middle-aged populace that supplies a steady tax base. These are the labor pool that office and industrial renters need to have. Active employees and their households shop at stores and dining establishments that lease retail units.

A working age populace also contains the most involved homebuyers that residential investors require.

Promissory note investors buy existing loans for less than the sum owed and become the current lender. Lenders sometimes liquidate loans to increase cash, but they typically unload them due to them not performing as agreed.

Some note buyers will restructure the loan to help the borrower keep paying their debt payments — for a long-term investment. The note purchaser is covered by the mortgage note that the borrower executed and can recover the collateral if necessary.

Population

One of the most basic factors in real estate investing of various strategies is the size of the market’s populace and if it is expanding. This is an immediate “sniff test” of the financial strength of the area.

Property Values

A mortgage note investor wants to find that property values in the area are increasing. The expanding value of the asset lessens the exposure of the investment.

Property Tax Rates

In a market with increasing tax rates, the larger expense of having real estate may force borrowers into foreclosure. This scenario hurts long-term investors, but it benefits short-term note investors who aim to profit from their investment immediately.

Real estate investment trusts (referred to as REITs) are investment organizations that buy and operate revenue producing real properties. Lease revenues and periodic asset liquidations generate the REIT’s revenue.

These trusts have to pay out 90% of profits to shareholders as dividends. Modest investors appreciate REITs because they are able to sell their shares anytime.

Investors in REITs are passive investors who have no input in the selection or oversight of the assets.

Investors, when they need to step away from active investing but choose to stay in real estate, look into buying REITs. They liquidate their own real estate to reinvest the capital into REIT shares.

A like-kind exchange is created to save money for investors who plan to do so. Learn details about this from our articles: Exchanging Real Property into REIT Shares with IRC Sections 1031 and 721 and What Is a DST 1031 Exchange?.

A 1031 exchange accommodator is required by the IRS to have a role of a middleman in the transaction. Our directory lists the best 1031 exchange companies in Dallas TX to assist you in your search.

An additional way that money is pooled for real estate investments is a real estate investment fund. These organizations don’t possess real property — they own interest in entities that do, like REITs.

Investment funds aren’t obliged to disburse their profits to shareholders. The investment revenue to the shareholder is the expected growth in share value.

The most common investment funds include mutual funds, ETFs (exchange-traded funds), and private equity funds for high net worth investors. Shareholders are allowed to liquidate their shares if they need funds, like REITs.

Because they are passive investors, fund shareholders are not part of any determinations such as property purchases.